Is NorthWestern Corp (NWE) Going To Burn Investors?

The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards NorthWestern Corp (NYSE:NWE).

Is NorthWestern Corp (NYSE:NWE) the right investment to pursue these days? Investors who are in the know are actually in a pessimistic mood. The number of long hedge fund positions went down by 2 in recent months. NWE was in 6 hedge funds’ portfolios at the end of September. There were 8 hedge funds in our database with NWE positions at the end of June. At the end of this article we will also compare NWE to other stocks including MFA Financial, Inc. (NYSE:MFA), Brinker International, Inc. (NYSE:EAT), and Sunstone Hotel Investors Inc (NYSE:SHO) to get a better sense of its popularity.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.

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How are hedge funds trading NorthWestern Corp (NYSE:NWE)?

Heading into the fourth quarter of 2016, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 25% decline from the previous quarter. The graph below displays the number of hedge funds with bullish positions in NWE over the last 5 quarters, which has sunk to a yearly low. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, GAMCO Investors, led by Mario Gabelli, holds the biggest position in NorthWestern Corp (NYSE:NWE). GAMCO Investors has a $17.4 million position in the stock. The second most bullish fund manager is Cliff Asness of AQR Capital Management, with a $6.9 million position. Other professional money managers that hold long positions include Millennium Management, one of the largest hedge funds in the world, Jim Simons’ Renaissance Technologies, and David E. Shaw’s D E Shaw. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.